From Corporate to Co-op

GMs from conventional groceries make the transition to co-op with the help of strong board-manager relations

During the 1980s and the 1990s, some natural foods co-ops attempted to acquire the skills and know-how of the conventional grocery industry by hiring grocery veterans as general managers. With many co-ops struggling to survive during those years, it seemed to co-op boards and managers that conventional grocery managers could bring needed expertise in controlling margin and labor, store operations, technology, promotions, and merchandising.

But somehow it just didn't work out. Co-op employees would put up passive and even active resistance, boards would feel they couldn't communicate, and managers would leave with bad feelings. This pattern was even more pronounced among co-op wholesalers than retailers.

In the situations I observed, the problem appeared to lie in a conflict of values between these managers and the organizations they attempted to lead. During this period, candidates from chain stores were attracted to co-ops primarily by the promise of autonomy to manage their own stores. The cooperative model, sustainable agriculture, and alternative lifestyles were not necessarily the chief draw for them. For some these issues might have been completely unfamiliar territory.

Maybe they didn't know what they were getting into. It might have been a shock to come from a conformist corporate culture and encounter self-avowed anarchists, pagans, vegetarians, animal rights advocates, gays and lesbians, and other expressions of "alternative" culture. Certainly these industry managers weren't used to employees who felt entitled to have input into management decisions and to question management directives.

On the other side, some co-op employees and board members could be pretty intolerant, too. People from the mainstream aren't the only ones who hold others' religion or politics against them. It's interesting that there were a few cases during this period where managers coming from conventional "old wave" co-ops (1930s-1950s generation) succeeded at "new wave" co-ops. Perhaps the shared commitment to cooperatives bridged any perceived culture gap. In addition, some store managers and department managers below the level of general manager started to come to work in co-ops, bringing valuable experience from the mass market, and many fit well enough to stay. But boards continued to show a preference for co-op experience by recruiting mainly from inside the natural foods co-op world.

I could name names (my memory probably goes back further than that of many board members and staff working in those co-ops today), but that's not where I want to put my emphasis in this article. The good news is that this old pattern seems to have broken. Starting in the late 1990s, more and more co-ops have been hiring general managers with conventional grocery backgrounds who embrace co-op values. These managers are taking leadership in their own stores and also in their regional Cooperative Grocers Associations.

To understand what draws managers with conventional grocery experience to co-ops now, and how boards can develop strong working relationships with them, I interviewed general managers and board members for two case studies of co-ops where former mass market managers are thriving and flourishing.

Berkshire Co-op Market -- Great Barrington, Massachusetts

Like many managers in the conventional industry, Art Ames worked his way up through the ranks from clerk to produce department manager to produce buyer. He worked in the southeast region of Hannaford Brothers, which previously had no organic produce line in the south. Art worked with local growers and with produce managers in 65 stores to bring in organics. Eventually he became a troubleshooter for stores "with high turnover and bad energy." When Hannaford's sold off their southern stores to Lowe's Foods, he continued as a produce troubleshooter and trainer for them.

It was frustration that drove Art to leave the corporate world. "There was always a battle between operations and merchandising. Systems were changed overnight. Underpaid people were expected to give a lot while the corporation cut their benefits package. There was chronic understaffing. I spent time team-building and then it would break down after I left. I invested time working with farmers displaced from tobacco to start co-ops," only to have the company end the program when it didn't serve their bottom line. "Their bottom line is not consistent, so their programs aren't either," Art explained. "A lot of hard work went down the drain."

"My biggest challenge is I thought it would be easier to get things done in co-ops."

When he left his last employer, Art moved back to his home state of Massachusetts. "I wanted to downsize my life. I wanted less pressure and more fun, and to do some community good." He was attracted to co-ops because he saw them working with local and organic growers, he wanted to support local stores, and he believed in a sustainable economy. He first approached a co-op planning to start up in Northampton, where general manager Rochelle Prunty referred him to a current opening at Berkshire Co-op Market.

From the perspective of the Berkshire Co-op board of directors, Art was a viable candidate but he had competition, including a manager with previous co-op experience. However, the department managers--who had been running the store as a team in the absence of a general manager--specifically asked the board to hire someone who knew the grocery business. "Willingness to learn wasn't enough," recounts board member Beth Skinner. "They said, 'Get someone who can talk to us about management.'" Moreover, the board had just signed a lease for a new store, so "we were looking for a high-powered person to come in and take us to the new location."

According to Beth, the board was not afraid to hire an "outsider," because their co-op culture was open. Berkshire had been part of Northeast Cooperatives' Manager on Contract program for several years, "which taught us the concept of feeling connected. We sent people to Northeast Cooperatives' meetings and to co-op trainings. Our board was totally convinced about the bigger picture for co-ops." They knew the new general manager would have a support network with CGANE (Cooperative Grocers Association--Northeast) and the consultants with whom the co-op had established relationships. This support network was in turn a draw for Art to take the job. "He didn't find working with the board a problem," says Beth. "He saw it as support. It's a more nurturing environment than he's ever had."

Nevertheless, Art says, "The board assured me that I'd run the show. If there hadn't been clear rules of governance, I never would have taken the job. My biggest challenge is that I thought it would be easier to get things done in co-ops than in the corporate world. I expected there to be less red tape, but there's more." When asked about cultural fit between himself and the co-op, Art reflects, "It's deeper than culture. Our mission is sustainable environment, local economy, and healthy food and living. We all want that--conservative, liberal and radical. We all want community."

La Montanita Food Co-op -- Albuquerque, New Mexico

Following the traditional career path of industry managers, CE Pugh spent 12 years working his way up from bagboy and cashier to store manager for a family-owned chain. (CE notes that this tradition may be breaking down as more people with degrees are hired directly into management positions.) Then he spent another 14 years as vice president of operations for a 24-store chain, also family-owned.

"The conventional side of the industry is not a good place to be right now," CE remarks. "WalMart is beating the brains out of everyone." He made a decision to leave, but he had two requirements for a new career: "it had to be on the natural/organic side--that's where the growth is and our family were already consumers," and secondly it had to be out west.

An ad in Supermarket News caught his eye. CE's family had been in a buying club that bought from Federation of Ohio River Co-ops but he didn't know what "co-op" meant. Research on the Internet brought him to the Cooperative Grocer website ("a fantastic resource") and several phone conversations with editor Dave Gutknecht. He also called the president of the New Mexico Food Dealers Association, a conventional grocers association. What he learned attracted him.

Determining a good fit takes skillful interviewing on the part of the board.

"I thought there would be at least the opportunity for sales growth. And the co-op structure was something I could get my soul around. I could get more excited about working to deliver value to the customers than to enrich a family. The co-op structure by its nature is a much stronger connection to the customer than could ever be achieved on the conventional side. I expected that the nature of a co-op would attract a higher proportion of people like-minded to me than the conventional side." CE adds that that expectation turned out to be right.

The members of La Montanita's board didn't consciously plan to go outside of co-ops for the next general manager, says board member Marshall Kovitz, "but we were forced to. With our second store we'd grown to a point where we needed someone with multi-store experience, and there weren't a lot of people with that experience in the available pool of co-op talent." Also, "due to some actions by past boards, we had a bad reputation in the co-op world that would be hard to set straight."

Knowing they would likely hire someone without co-op background, the board was concerned to ensure a good fit. The leading candidates received information packets with the bylaws, board policy manual, and financial statements before they were brought to Albuquerque to be interviewed by both the board and upper level managers. They also spent time in the stores so that staff could meet them and then pass on comments to the store managers.

Determining good fit takes skillful interviewing on the part of the board, Marshall believes. "We asked them general, open-ended questions. We'd ask, 'What do you think after reading our governance manual, our membership information, our financial statements, and walking around and talking to the staff?" Board member Ken O'Brien recalls, "We asked pointed questions, about dress code and tattoos and sexual orientation. CE's responses were excellent. He presented himself in a way that we knew would work with staff." But the board didn't cede authority to staff, Marshall makes clear. "If we could find someone who embodied our values and could communicate clearly, [we knew] the staff would accept them regardless of their cultural background." Ken adds, "We can make sure a person has a co-op value system. If they've participated in civic, church or community service, like CE has, we know that spirit is there."

The board needs to identify its own fundamental values. they should have a sense of the direction they want to go.

Once on the job, CE found himself pleasantly surprised at the organization and professionalism of the board, and the intelligence and commitment of the workforce, although store operations systems were weaker than he expected. Serving on the CAP West oversight committee and participating in the Four Corners Cooperative Grocers Association introduced him to a network of peer support.

Advice for boards

When I asked the managers and board members interviewed for this article what advice they have for a board of directors contemplating hiring a manager from the conventional grocery industry, they came up with these points:

First, the board needs to identify its own fundamental values. It's okay for the board to say, "We're in trouble," but they should have a sense of the direction they want to go.

Identify what the issues might be in integrating a general manager from the conventional side. Let the person know what to expect. Don't paint a rosy picture.

Include a diversity of perspectives in the hiring process. If the board is not diverse enough, bring in staff or others who will ask tough questions.

Look for people who have worked their way up in the industry and worked in every part of the store.

Managers of chain stores are used to having a lot of infrastructure that a single co-op cannot provide. Typically they don't work with balance sheets or cash flow statements. Make sure they have the skills you need.

Focus on the candidate's participatory management style. "If you don't have that, you'll crash and burn hard in this sector."

You're not alone--you are part of a network that can support your co-op. Don't be afraid to take risks.

Editor's note: Co-op managers from the conventional or chain retail sector aren't alone either. Dubbing themselves "CoCoConvert," a group of these managers will be meeting in Albuquerque in January to explore further lessons from the "dark side."